An HOA Accounting Guide For HOA Board Members HOAM

This template will guide you through the process of creating and delivering a first-class newsletter to your HOA members. An independent CPA reviews the HOA’s accounting methods and documents and makes sure they are accepted accounting principles (GAAP)-compliant. Give homeowners 90 days or more to remedy the situation before involving collections. If they respond to notices with defiance or anger, they are not as likely to voluntarily pay.

This document details all of the rights of the homeowners as well as the role that each individual HOA member will play in the organization. If you are not sure about how to prepare for this event, you have come to the right place. Below, we have listed everything that you may need when it comes to preparing for your financial audit.

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The board of directors makes decisions for the association and then hires a management company to implement their vision. An HOA or management company gathers information in this database, which associations can use to maintain and hoa accounting expand membership, streamline monotonous tasks, and inform and engage members. If financial statements are incomplete or unclear, they can confuse association members and cause mistrust within the community and board members.

There are a few governing documents, each with a different level in a hierarchy. Below, we will discuss what it means for an HOA to be audited and how you can best prepare. Since one of the main obligations of every HOA is to maintain the community in good condition, it’s important to know what to look out for.

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When looking into property management companies, it is important to look for a company with a strong financial background. The entire community association becomes ineffective if there is improper handling of finances. Some community associations even opt to put their financial information on their website to allow homeowners to view it at any time. Of course, not all information needs to be publicly accessible, but you should include everything that can be included. Transparent financial processes help to promote teamwork and positive community relations between homeowners and association board members.

If, for example, the license has been issued by an NYC board of accountancy, a specialist can conduct audits only in New York. To serve HOAs in the remaining 49 states, they will have to acquire licenses in each of these regions, which is allowed by reciprocity laws. The above issues can impair the performance of any HOA, regardless of its size and region, as well as the experience and integrity of board members.

Types of Accounting Checks Apart from an Audit

For this reason, your HOA board should allocate money in the budget for an audit, especially if your state laws or governing documents require annual ones. Then, with the help of your HOA board, a CPA will collect all necessary accounting information. The CPA will review your financial statements, annual IRS tax returns, annual budgets, and even board meeting minutes. An examination of other documents, such as vendor contracts and payroll records, will also take place. An audit is a complete study of the financial statements of the organization or, in this case, the HOA. Just about every business does an annual audit of its financial statements to comply with various requirements.

The last important thing that must be done when performing an audit is to plan out the annual meetings. The HOA’s financial records play a crucial role in assessing the overall financial well-being of the organization. These bylaws are very important, as they describe how the actions and decisions of the HOA board members impact the entire community. Having these documents is very important because they will provide you and your HOA management with a clearer understanding of the organization’s current status.

AMS software uses database information to create reports, assess fees, and track violations. It offers centralized access to the data needed to produce timely board packages. Association accountants only input the information one time, and it is reproduced across the system.